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Consumer Financial Protection Bureau

Series/Special. Director Richard Cordray's semi-annual report. New.

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Us 16, New York 5, Washington 3, Arizona 3, Freddie 2, Ohio 2, Neal Brodsky 2, Mr. Sherman 1, To Do 1, Ms. Maloney 1, Calvanist 1, The Banking System 1, Fbi 1, Backload 1, Fannie 1, Unbanked 1, Online 1, Freddie Mac 1, Paypal 1, Chuck Schumer 1,
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  CSPAN    Consumer Financial Protection Bureau    Series/Special. Director Richard  
   Cordray's semi-annual report. New.  

    September 24, 2012
    3:15 - 6:00am EDT  

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the first is that congress passed the law. it is the law of the land. there are now due protections
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and procedures for remittance transfers. if the consumer bureau did not exist, that would still be the law. the consumer bureau was the agency designated to implement the law by adopting rules. those were out for public notice and comment. we had many discussions with many parties about an before finalizing them. we finalize those in february. at the same time, we propose a supplement to consider whether to exempt institutions below a certain threshold from having to comply with the rule because it was more burdensome than made sense for them. we adopted that threshold in august. there are many, many, thousands of institutions that are exempt from the role. it is still covered in most of the consumer market. >> through or discussions, have you found, in surveying the entities that will be affected by this, have you found a large group of them that -- [indiscernible] >> congress passed a law that is settled -- we did issue a rule that is now settled. there is an opportunity to perhaps clarify and provide guidance around some of the points being raised. unless to reopen notice and comment and redo the process, we are a little more constraint now. we're having discussions with various providers who are expressing concerns to us about what we can do to try to address those concerns. we will do as much as we can.
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we also recognize we need to provide clear and simple guidance to a lot of smaller institutions, and we will come at with a small-provide a guide to the rule which will be more accessible and in plain english compared to what is written in the federal register that is coming out soon. we will work with institutions to try to ease the implementation process as much as possible. >> if you see that there is a construction of services due to the number of folks doing this, do you look at raising this number? >> we just went through a process on that. we can do and redo processes for ever, and and people complain about regulatory uncertainty. we went through process -- >> let me interrupt just a second. the law is there to solve the problem. if the problem, if there is no problem at the lower end,
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institutions with very few transactions, then we need to eliminate that because we are creating a problem instead of solving a problem. >> correct. that is what we did. you do not have to worry about it, you can throw in the trash. >> but if we find that as a result of constricted services people are getting out of it, and the folks getting out of it are not the problem folks, do you not think we need to reconsider that at least? >> what the law requires is that, for the first time now, consumers are entitled to certain protections in this area. if errors are made, there is a resolution process. they are entitled to know what money will be received on the other and and not just toss the money into a black hole. >> i understand you are going. you mentioned the word error. the way the rule is written, the error can be assigned to the individual providing -- the
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provider who delivers the funds. >> that is an issue we are working for with different institutions. i think it is somewhat overstated. >> how can you overstate that? either you counted as an error or you do not. >> shall i explain? counting as an error has to do with who is responsibility -- whose responsibility is to sort out if it is an error. that is the first issue. congress provided that it is better that the institution sort out how the error occurred than the individual be given the burden of doing that. once that is done, the fact that an error was made by the
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consumer is something that can be worked on back and forth between the institution and the consumer. there is some concern expressed that there might be fraud here, the consumer making an error deliberately and the institution somehow on the hook for sorting through that era. nothing prevents the institution from suing consumers who attended the problem. to get relief. -- who tend to be fraught them. to get relief. these are more complicated issues that -- then can be discussed in 30 or 60 megabytes. we're having this in discussions with some providers themselves. we're seeing if there is any clarification or guidance we can give. >> this is a big situation for the providers of the service. an error which is not anything they have control over -- i think we have a huge problem there that needs to be at least looked at and worked with to some degree.
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>> with respect, the notion that tomb -- consumers could do a four-door transfer and there is -- do a $400 transfer and there is an error, that they will sue you and find an attorney to bring a case based on that, i think is vastly overstated. we do not want to foment litigation, and we're having discussions to see what we can do to address these concerns. we're happy to have them with you and your staff. >> thank you. >> now, the gentleman from california, mr. sherman, is recognized for five minutes. >> i thank the chair. the federal government does an awful lot to try to support the home market, especially in this difficult economic time. we do so well at considerable cost and considerable
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controversy. we have a home mortgage deduction and property tax deduction. we have taken over fannie mae and freddie mac. considerable controversy there. at some risk to the federal government. now, the federal reserve has its qe3 program, which is designed to support home prices and allow people who might otherwise not be able to buy a home to qualify for a lower interest rates. money the federal government is sacrificing for other goals to try to make sure we can turn around the home prices and provide for home ownership. your agency is now crafting rules defining qualified mortgages which will govern how housing finance works in the future. an issue reports indicate the rules you are considering are very conservative and could restrict the number of creditworthy borrowers able to obtain mortgage financing. how you reconcile your agency taking an action that would depress home prices, reduced the number of people could qualify for a loan and the component -- and become homeowners what everybody else is shouldering the cost to
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accomplish the exact opposite gold? >> the short answer is that that is not what we are doing. >> that is a good answer. >> the longer answer is that this is not a proposal -- the only proposal publicly on the table did not originate with us, but originated with the fed. it is a difficult area. the proposal raised a number of areas that it did not yet seek to resolve, but sought to get broad input and comments from people, which was sensible at that time. we have received that comment, received for the content -- comment, incessant comment on this. it is important to people. the question you raise is one that has been raised numerous times to us. it is fair to say we're getting the message. if we dropped the circle too narrowly, we could ourselves irresponsible for further troubles in the mortgage market.
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we do not intend to do that. we recently reopened the proposal for more comment because we got some new data that gives us a better handle on what is actually happening in the mortgage markets. in this somewhat unnatural face, it is difficult to predict where it is going. i think that people will be satisfied in the end that we have taken that account into concern. it reminds me once again how important this is to people. >> i think you for your attention to that. one part of these rules goes back and forth between rebuttable presumption and safe harbor. of course, the economy works best when the rules are clear and the regulators are in touch with the markets and up to now when some new abuse occurs and they can quickly change the
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rules. if you cannot draw clear rules and cannot modify those rules as necessary, then we are stuck with the litigation system. the vague rules, rules you cannot rely on, then you have litigation, liability, and a loss to consumers and the economy. is your agency leaning toward rebuttable presumption, and do you think you can write a rule that provides a safe harbor so that a business can be certain that if they comply they will avoid the liability and paying for liability insurance? >> i found myself saying in my head, amen to your comment about that. as a former attorney general now the head of a federal agency
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that has among other responsibilities law enforcement functions, gray areas of the law are not appreciated. they are difficult for people trying to comply and difficult for us. i think we understand it if we write rules that are murky, that will be essentially an abdication of our responsibility. we will end up getting results in course through litigation. it will take years and be very expensive. we understand, and i think we are making real efforts here to draw very bright lines about what qualifies. the safe harbor vs rabat consumption -- presumptions comparison is a bit of a garage. even a safe harbor is not -- mirage. there was a bit of a marketing concept there -- the more important point is, are we trying bright lines that will discourage and minimize the prospect of litigation?
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>> let me tell you that all the sea captains i have talked to really want a safe harbor. >> look, if somebody said a safe harbor or something else, i would take the safe harbor. but i think that oversimplifies the issue. the issue is minimizing litigation costs and the risk of that that would lead people out of this market. we will try to do that. >> thank you. >> the ground and was not at the joke. -- groaning was not at the joke. >> let me pick up -- i very much appreciate your time today. one of the frustrations that some of the members are having is that we hear there are 27 oversight meetings, but a lot of the questions and i did answer. we're talking about the questions, we are talking about everything but the answers. i was told, and please correct
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the record, but i was told that you yourself had mentioned that the cfpb would absolutely not be adopting a safe harbor. is that not accurate? >> first of all, that role is ending and not finalized. >> that is my point. it is a yes or no question. did you or did you not say that cfpb would not be adopting safe harbor? yes or no? >> it is a little like being a justice of the supreme court saying, are you or are you not going to find affordable health care act unconstitutional? is in the process, not yet resolved. >> my question was, did you say that in the past? that is something that happened or did not. you see how simple the question is? did you say it in the past or not? >> i have not taken a position because the bureau has not taken a position. i have discussed the issues in ways i discussed with congressman sherman, explaining
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the difference between safe harbor and rebuttable presumption is in my view quite overstated. we will try to minimize litigation and draw bright and clear lines. that is what we will try to do. we have not done it yet, so for me to tell me what we are going to do when it is not finalized would be, as i understand it, improper. >> that is why, when there is a lot of talk about lack of oversight and the uncertainty out there, there have been 27 meetings, but all of them with, we are working on it, we will let you know when we are done. it is extremely frustrating peaky sometimes that is the accurate answer. if we are working --. >> it is sometimes the accurate answer. if we're working on it, sometimes that is the answer. if i can answer more definitively, i will certainly try to do so.
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>> do you think the litigation risk associated with the ability to repay standards will be increased if the cfpb goes that way? with that increase litigation risk? and ability to repay as opposed to a safe harbor? >> the rule is an ability to repay. the proposal that the fed put out offers the choice between the so-called safe harbor any so-called rebuttable presumption. i think that a rule that creates uncertainty and murky criteria will foster litigation. that would, in fact, restrict access to credit. >> today, do you think there are a substantial number of borrowers who are qualifying for mortgage credit who should not be getting loans? >> today? i do not think so. i think in 2005, 2006 ,2007 ,
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there were mortgages made for people who honestly should never have qualified. they falsified income -- legions of stories around this. today, i would say we had a financial crunch, a credit freeze, we have had a deep recession. right now, credit is tight. that is because of what happened to the economy in a 2007-2008. >> do you think there are qualified borrowers not receiving credit under these lending standards? >> my sense is that there are -- the word in that is qualified. my sense is that credit is very tight, may be too tight. >> lastly, i will end with this -- how do you anticipate, whichever way that cfpb for the qualify mortgage role, do you think it will expand or contract that availability?
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>> i think we are trying to write a rule that confers the protections that are intended under the ability to repay provisions. we are trying not to have the unfortunate side effect of drying up credit in the mortgage market. it is not an easy issue. it is a hard issue, and it is hard to gauge the future of the mortgage market right now. we ask everybody what is the future, what is going on, but financing is going on in the market. nobody has very clear answers. let me say that if we write a rule and we find that it has unduly restricted access to credit we will go back and look at redoing get. regulatory uncertainty is what people complain about now. we have these rules in place by january, then things will be
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certain. we will remove that cloud. people may then campaign that now it is certain that date -- but they do not like it, but that is what we are trying to work on now to take account of their concerns. >> thank you, my time has expired. >> ms. maloney had a question to the point you made -- >> we are from the sense that -- same state and city, and are experiencing the same situation. even though the economy is improving in new york and the country overall, credit is incredibly tight, even if you have a a + + rating for your finances, you cannot get a loan. why is that, and what do we need to do about it? is it the at fannie and freddie? -- is it the backload at fannie
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and freddie? some of the big banks say they are pushing back properties if they find anything wrong. they pushed back into the huge loss on it. they feel they're getting so much of this that they cannot put any capital out. that is one explanation. but we have now had 30 months of job growth. >> we went through a credit crisis that hurt a lot of institutions. there are a lot of problems that occurred in the financial crisis, including put back mortgages that were inadequate to begin with an x-rated risk
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for people active in this market. there is any number of different explanations, many of which have some validity. >> it was just meant to be a question off of a point of privilege. >> i am amenable to yielding to the gentle lady for as much time as she may consume. >> thank you. i would just like to say that this credit crunch is the biggest problem that we have in having a robust recovery. i would appreciate you getting back to us as soon as you can with what you think we could do to try to address that. one of the reasons housing is now beginning to move toward is that people cannot literally get mortgages. they cannot. they come to my office and they are making $400,000 a year.
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they have an a-plus rating and they can i get a mortgage anywhere. i just wanted to jump in on it because it is one of the biggest problems that we have. i think it is one of the biggest problems we have. i would like to pick his brain
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and see how he sees it. i yield back to mr. green. thank you so much. congratulations. >> thank you. i think the chair for this opportunity. thank you very much for appearing today. we do see you quite regularly. we appreciate your testimony i would like to visit with you on your program, but from a different perspective. i would like to talk about the notion, many people in the society are bilingual. in my district, we have the ballot in four languages. how does this tie into know before you owe. we are talking about understanding and making sure people understand the document they negotiate. if we are doing this, and i know you are making an effort to get the job done, to what extent are we translating documents and providing documents in other languages such that persons can know before they know? that is the first question. i will have a quick follow-up. >> the issue of access in consumers in other languages is one where i am not satisfied with our progress to date. we need to do more.
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our complaint call line is accessible to people in well over 100 languages. we are good on that. in terms of our website, we do not have as much translation there yet in our view. we are working on it. it is something we are taking into account. in the remittance rule we finalized, if you advertise in a foreign language and are trying to get customers by using that language, the disclosures need to be provided in that language. it would not be fair to speak spanish to them and then give disclosures in english you are not sure they can understand. there will be other rules as we go. we will work with that. >> i want to comment on that last didn't. that is an important aspect.
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we do have persons who will attract business in a certain language but when they do business, they do it in a different language. english when they do the business, but when they are attracting the business, they will use spanish or other language on various radio stations. i appreciate your looking into it. >> thank you. i appreciate that. i agree with my colleague from new york about the credit issue. i will make a note it is not an interest rate problem as to why people are not able to get loans right now. we are having this discussion about quantitative easing three happening. i think that is important. i am happy you are here. precious little can be done unless you have that actual direct budget direction or input. by my definition, which i think
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is the constitutional definition, that is what real true oversight is. i know you are in a particularly tough spot to a degree. you have said a number of times you have lost count of all these other things. not all of these things were here when that was passed. i am a freshman of 12 on this side of the island. -- aisle. i want to not talk wardwell about the specifics about your rule. i want to know this. why do you believe so many entities that will be falling under the purview of the cfpb are nervous or afraid about what your agency and rules will do to them?
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>> thank you. i have asked this question. i want to understand it. if we can alleviate some of that anxiety and concern, we want to do so. a lot of it stems from the fact we are just knew. people have not dealt with us before. they are not sure what we will do. as a new agency, it takes us some time to figure out what we will do. what our priorities are. how we will approach things. we are trying to think through that carefully. it gets easier for us to signal what we intended to as we go. people will begin to see how we do our work. they do not know what to expect. >> i think that is part of it. could it be because they believe what is being imposed or discussed about is not efficient or workable, in their opinion? >> that could be the case. i am sure that is part of the reaction in some cases.
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>> do you believe the big banks you are dealing with now are acting in good faith? >> i have found over the years that most citizens, most businessmen in particular, they want to follow the law. they want to get it right. i am sure they would like to have clarity and guidance. there are some who are interested in taking advantage of every gray area they can. i did not force law against a number of people. but in the banking industry, my guess is, as a legal professional, people will follow the rules if the rules are clear to them. community banks and credit unions, i have worked with them for years now, going back to my
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time in state and local government. they have a sound business model. they are under a lot of economic challenges because of the changing nature -- nature of the market. consolidation is going on for a lot of reasons. i think the vast majority of people deal in good faith. they get in trouble for a variety of reasons. the ones who are looking for trouble are not caring about the consequences because they downplayed the notion they will get caught. >> do you believe it takes a massive government agency like this one to guarantee that somehow? >> i do not think that is our role. it is to focus on consumer protection and make sure there are clear rules to address some of the obvious problems we saw, particularly in the mortgage
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department and other places. >> you do not believe market forces can dictate that? it has to be an agency like yours? if these people are acting in good faith, and you believe that, which i have seen to of heard that is what you said from financial advisers, community bankers, all the way up to big banks, why do we need to be going some -- through some of these things? why do we need to be causing that same anxiety? >> i would say two things. we just saw how will that work. in 2007 and 2008, the economy of the united states melted down dramatically. trillions of dollars were lost because the markets did not work properly. secondly, i served as ohio attorney general. why do we need one? i have 1500 people in my office because somebody has to enforce
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the law. >> i am a colonists. -- calvanist. i understand it is not the nature of an agency to leave things alone whether they are good or bad. that is part of my concern. that is part of the anxiety. as i have talked about -- to those people who are involved, that is the anxiety that is traded. -- being created. they feel like whether they are acting in good faith or not, there is an anvil hanging over their head. >> when you were explaining your calvanist, i hope you are not pointing at me. >> thank you.
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finally. good to see you again. when you get to me, you know it is almost over. you say in your opening statement that your push for accountability extends beyond mortgage servicing or holding both banks and nonbanks accountable. we had a hearing last week on credit bureaus in particular. i am not sure if you are aware of two pieces of legislation. one would address medical bills and the other was to add payments to the consideration of credit scores. the medical bills. what are you doing anything? then i want to ask about two bills, medical bills in particular. >> ok. in general, what we are doing with credit reporting companies?
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>> referring to consumer credit bureaus. >> we are. first of all, we are very appreciative congress is taking interest in this area. it is an issue that affects americans' dramatically and across the board. most of them are unaware of it. it is something where they signed up for anything -- credit files is being kept on them. that is often used to dictate whether they get along. >> that information is often incorrect. we learned one in three of the information to send the collectors for medical debt is wrong. is there anything you can do to address that question? are you aware of the bill that is before this committee? >> yes. there is a lot that will be able to do to address that question. we will be able to send in teams who are used to examine
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financial companies and finding out exactly how they operate. we will get a neutral view of what the error rate is. there have been different estimates that are different from one another. we will be able to really get a picture of what is actually going on and what the problems are and what made me -- may need to be done. >> medical bills are a problem in particular. i do not know if you know a lot of the medical billing system. i will just be for my own personal experience. to figure out what gets credit and how much, it is not necessarily whether you get sick or have one of these. could happen to anybody. it is not so much a function of -- it is a function of your insurance coverage than it is your ability to pay. i think it is unacceptable to use inaccurate information.
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is an area you need to look hard at. >> a lot of these are small amounts but they can have a huge impact on your credit score or block big transactions like mortgages. we are interested in what you will find. we are looking at it closely and take action as needed. >> the error rate problem is the big problem there. you are getting that information into a system that has a dramatic impact on a person's ability to get credit. you and i have had this conversation before aboutnonbank lending. are you moving the ball at all on that question, particularly the payday lending? >> we had our first hearing on this issue.
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we put out a request on the information to gather barack input on the problem. we now have begun actual examinations of payday lenders. similarly, of similar products offered by banks. we are getting a much deeper understanding of this. we will consent -- we will consider what steps need to be taken. i want to emphasize we do not have under our statute authority to impose an interest rate cap, which is the approach that has been taken at the state level to address the issue at times. >> is it within your expectation you will be doing some kind of report? that would be helpful to us as legislators.
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>> we have not determined that. we might the proceeding in a number of ways. we are already engaged in supervision of the pay lending industry. we have rule writing authority. >> my time has expired. thank you for coming today. thank you for your good work. >> i appreciate it. >> thank you. i would like to welcome one of my constituents. i have known him for a long time. i appreciate your commitment to consumer protection. i have a couple questions about the structure and the budget of the committee. then some issue questions. the first is regarding the structure of the cfpb. i am bothered there is no reference in the creation about safety and sound of a financial institutions. if you're only charges
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protecting consumers but you have no responsibility to the safety and soundness of the risk -- of the institutions, it hurts the safety and soundness of our financial system. what are your thoughts on that issue? have you had a chance to reconcile that? >> it is a new approach that has an agency that focuses and decouples that from the chartering. we do not have the authority to make companies offer products at a loss. we have no authority to require them to do that. the notion that we wouldn't pay attention to the safety and soundness would be quite misguided. if institutions are not going to be safe and sound, they will not be good for consumers. >> i believe you would do that. do you believe we need to make it clear in the law that the
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cfpb should look at safety and soundness as one piece you should look at? >> i think the law does that unpleasantly by making our -- does that implicitely by making our regulations subject to being overruled. >> with only a supermajority vote. not a simple majority. >> that is right. if it were not a close call, i have no doubt that could be the outcome. i do not think there is a change in the law needed. i think if we show we are not willing to cooperate with other regulators and work closely with them, maybe that should be reconsidered down the road. that is not the case now. >> i do not have concern with you at the helm now. you are one of the few agencies in washington that does financial regulations that is not aboard. the federal reserve is a board. you are one person and you run
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the agency the way you see fit. i have total confidence in you know you. who knows who is after you? i think that is why it is important to look the agency. i appreciate that. the other question is about your budget. it comes -- you could have up to 12% of the federal reserve's budget up to $598 million without a request. an extra $200 million as i understand it discretionary increase from congress. i think the requested 440 some million this year. my question is do you believe the cfpb have less accountability then the fbi? >> my understanding is i was not here when the -- was enacted. we should operate on equivalent terms as them.
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it is true to some extent of the structure. i think it makes sense for us to be on par with others. that would be my sense of it. >> that is a choice we have to make. i have concerns. i want to quickly talk. we have a big somali community in columbia, ohio. -- in columbus, ohio. these remittances are truly lifelines for those folks. and other folks that are immigrants and trying to help family back home. i am curious, when i read your rules and every the comments
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from those, it sounds like a closed networks like western union and money gramm will be able to comply with your february deadline. a lot of the wireless services -- a lot of the wire services might have real trouble with that. have you been told that and doesn't give you cause for concern? what it tells me is there will be less competition and more expensive costs to these remittances and less access. is it something you are aware of and are you willing to do something to give folks time to make sure they can comply with your regulations? >> we are aware of it. i was some phone just the other day. we offered to make us available. this has been long telegraph. the law was passed more than two years ago. i also think this is an area -- you can appreciate this -- the technology and innovation are changing very fast in this area. paypal is in the space.
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prepaid cards are being used to get money overseas. transfers may now be starting to increase. i have no desire to have a lot drive out institutions from the space. they are treated a little more generously under the law. we will try to work through other issues with them. >> i appreciate your indulgence. when you get to me, you are really done. one other question i have is when financial institutions do with many regulators, they get some confidentiality of the privilege on the information they provide, but they do not receive that same benefit to the information they provide to
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the cfpb. would you be amenable to congress amending the federal deposit insurance act for which privileges is preserved? >> we think the law is clear. we issued a bulletin to that effect. we went through the rulemaking process to inductive role that has a force of law. we have said there is legislation pending. we think it is clear now. that is our position. >> can i do one more? >> is a really good one? >> i do not know. >> go ahead. >> thank you, mr. chairman. i appreciate, again, your indulgence. i want to ask you quickly about
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the ability to pay the qualified mortgage. i understand you have worked on your rulemaking and your rulemaking on underwriting ability to pay mortgage requirements. and high cost loan requirements. it affects some of the smaller institutions like community banks. a lot of community banks in my district. i am curious if you have a game plan about how you will deal with these regulatory changes and make the manageable for small institutions like community banks because they serve a lot of customers, especially in the rule part of my district and in a lot of the southern ohio counties that i am familiar with, as well.
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>> is it a really good one? should i answer? [laughter] we are mindful of that, congressman. one of the things we have begun to realize we will need to put out when all of these rules are finalized is what i am calling a slim mortgage booklet. it will boil down the changes in the rules in plain english so it can be followed. i think that is important for us to do. it is important for us to make it easy for people to understand what will be required of them. there will be an implication period on those rules. >> i appreciate your time. >> you think that when did ok? we agreed you were worth the
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extra time. this is the moment where you know you were near the end. one of my great concerns is the differences different states operate under. i come from a trust state. the member next to me comes from a mortgage state. they use a judicial foreclosure system. in the rule writing, the one- size-fits-all colloquialism. i have a great concern. as you do that, are you finding mechanics looking at those differences in different state laws? i come from a 91 state for closure system. there are no lawyers at the closing because many years ago they did a constitutional amendment in arizona to try to do the things to make buying a piece of property as inexpensive as possible. any rules that come from the federal government that change
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the costs of doing that transaction, that is my concern. >> it is a great question. i am very mindful and sensitive to differences in state law, which usually reflect different circumstances. things are different in arizona than they would be in new york. our approach is we will be leery about pre-empting state law. most of what we do will ride on top of state law and coexist with state law. that was most of the premise of the dodd-frank act. in terms of, it is the nature of things we will be adopting rules that apply throughout the country. the difficulty of how that fits with local conditions is something we will try to understand. >> you have to do with both the
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types of instruments we use, the coding procedures -- the closing procedures, even down to the weight title insurance is issued. you do have some dramatic regional differences. >> yes. that is right. we have an office of intergovernmental affairs that will help us try to be sensitive to those things. people can comment on our rules as we go and we will take account of those things. if we are getting this balance wrong somehow, i hope people will bring that to our attention. we are trying to be mindful. >> one example. let's say one lived in iraq -- arizona and had a handful of properties she owned and wanted to sell. she chose to carry the loans on them. she was going to act on the bank -- as the bank on it.
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she does half a dozen of these in one year. do you think someone will fall into your purview? >> no. well, i do not think we have -- i am not clear we have anything to do with person to person lending if it is not -- i do not think it falls under the broader provision. i have to go back and look at that. i would say it would not be any kind of priority for us as we are trying to allocate resources. the things that are broader patterns of potential consumer harm are the things we should prioritize. i would have to go back and look that. >> if you could and let me know, i have seen in arizona where certain subdivisions have been subdivided where the old farmer
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or rancher of that owned the land cases it up and sells it and carries back the loans for 10 years. those sort of things. will they be pulled into another regulatory scheme? in a previous life, i was the treasury of the county. one of our side projects was to reach out to the unbankable population. the population that would show to our countertop twice a year to pay tax. they had a checking account. i do have this great fear as we reach out to protect everyone, do we change the cost structure that more of our population does move into the unbankable population because they will not fit in the box? in many ways, this might be a statement. i hope you are keeping in mind these -- i do not want to call
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the more marginal populations. they have a relationship with banking financial institutions through distrust or some other reason. being very careful we do not build additional barriers for them to come join us. >> i would say, ironically, you and i may be the only two people in the same room who can speak the same language. i used to be responsible for collecting the real estate taxes. i had a lot of the same experience. it was good for me. what i would say is we are very concerned about the under- banked.
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they are very interesting in particular. they have a bank account. they have a lot of alternative financial policies and services. whatever reason, the banking system is not meeting their needs. we need to understand that better. >> we found it was more complicated. we had folks who had the income and resources. they came from an ethnic background where they did not trust the institution, and the fact of the matter is, they should have every right to not trust institutions and have another alternative channel if that their particular background. this is a tricky line. >> it is. >> my fear is we raise the cost structure. so institutions and of having to limit services, we start to drop parts of bank.
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>> it is a tricky line. one of the things we will now do, the banking agency says we have the ability to protect consumers even if they are getting their services from unbanked firms. we will try to be thoughtful about how we use that authority, but we care deeply about these people. just because they are not in the banking system we care very much about how they are getting their ways and means of their lives managed and thinking about whether they are getting the same kind of protection they should be entitled to. it is interesting and difficult but very important. >> it is one of those things my office has an interest in. if you have an occasion, think of it, and send those things. i think that is the end of this hearing. >> i would like to add my appreciation. you have been incredibly generous with your time. i am proud of you and work your department is doing.
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i think you are doing a sensational job. i often -- i also have a goal. that is the federal reserve interpretation of the ability to pay standard. i am looking forward to that report sooner rather than later. let's get something done. i want to show the world we can solve this problem. anyway, thank you for all the problems you have solved in you are working on to solve. >> and the ones we are hoping to not create. >> the chair notes some have additional questions to the director. they may wish to express -- to submit that in writing. without objection, members will be able to submit the questions in 30 days and the old place responses in the record. thank you for it time, thank you
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for your generosity, and this is closed. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> c. the first of the presidential debates on october 3. watch and engage. next, "q&a" with former inspector general neal brodsky. then at 7:00 a.m., your calls and questions on "washington journal."
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>> today, millions of students are paying less for college because my family took on a system that wasted millions of tax dollars and using banks as middlemen. less said, let's give money directly to students and we have helped millions of young people get an education. >> we need to make sure our workers have the skills we need for today and that our kids are getting an education that will allow them to compete tomorrow. that means it is time for us to put our kids and their parents and their teachers first and the teachers' union behind. their interests are very different. >> the first debate is less than two weeks away. wednesday october stirred. jim lehrer moderates from the university of denver and questions focus on domestic policy. watch and engaged on c-span, including a live debate preview starting at 7:00 p.m. eastern. and posted it, your reactions
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and comments. follow our live coverage on c- span, c-span radio and online at c-span.org. >> this week, inspector general of the garments -- inspector general neal brodsky and his new book called "bailout." >> what role they man named bill burke play in this story that you wrote in your book? >> bill is a former colleague of mine. i used to be a prosecutor in the southern district of new york. we had become sort of friendly. i reconnected with him once i
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started the process of applying for the job of special inspector general to oversee the bailout. bill give me some advice as those went through that process. after i got the job, someone who i've known from new york and someone who had integrated into washington, he was sort of my political sounding board. bill, who had been in the department of justice and had been at the white house had a fundamental understanding of those things. every time i came up against a brick wall or some touchy and tricky mess that i had got myself into, bill was there as a sounding board to let me know how the town were given how they could effectively kill me. and generally to book me at the times when i felt a little beaten down or a little
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overwhelmed. he helped give me some focus and remind me that i had an opportunity with this job not just to provide oversight over this bailout, but to use it as a bully pulpit to try to affect positive change. >> what impact did it have not any thing. >> coming from the u.s. attorney's office up in new york, politics were really never much of an issue. we were colleagues. we became friends. not just me and bill, but overall pared it transcended politics. we had a shared mission. politics is something we did not talk about much. i had friends who i realize there were democrats until years later. bill was good friends with chuck schumer's

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